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Term 3 · Week 1 · Compound Interest

Standard problem

Standard

Parents want ₱50,000 for enrolment in 5 years. How much must they deposit now at 4% compounded annually? Round to the nearest peso.

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Answer: 41096 ₱

  1. Present value P=A(1+r)t=50,000(1.04)5P = \dfrac{A}{(1+r)^t} = \dfrac{50{,}000}{(1.04)^5}.
  2. (1.04)5≈1.216653(1.04)^5 \approx 1.216653.
  3. P≈41,096P \approx 41{,}096 pesos.

Budget of Work competencies

  • gm11.t3.w1.c1
    Solve problems involving compound interest, including maturity value, future value, nominal rates, and number of terms.

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